|
| Jindal Steel in race to buy Zimbabwe's Ziscosteel |
| Ishita Ayan Dutt / Kolkata Feb 02, 2010, 00:22 IST |
|
ArcelorMittal is the only other bidder for the state-run company.
The Naveen Jindal-controlled Jindal Steel & Power Ltd (JSPL) is in the race to acquire a majority stake in Zimbabwe Iron & Steel Company (Ziscosteel) — the largest steelworks in the African country.
JSPL is pitted against ArcelorMittal, the only other suitor for the company. According to JSPL sources, the qualifying round has concluded. Following this, due diligence will be done and then the bids will be submitted.
Ziscosteel is 89 per cent owned by the government of Zimbabwe, which is looking to divest a 60 per cent stake as part of its privatisation programme. It is not clear how much the deal would fetch the government of Zimbabwe.
Ziscosteel has a capacity of a million tonnes and is a facility for long products (used in the construction sector). Industry sources said a greenfield facility of the same capacity would cost anywhere from $600 million (Rs 2,782 crore) to $1 billion (Rs 4,638 crore), depending on the nature of integration.
However, Ziscosteel has a debt of around $300 million (Rs 1,390 crore). The plant stopped operations in 2008 once the economic crisis broke out, as it was operating at less than break-even capacity.
Apart from the steelworks, Ziscosteel also owns an iron ore mine in Zimbabwe. JSPL has been scouting for raw material assets.
The company will be investing $2.1 billion (Rs 9,736 crore) on building plants for steel, pellet and sponge iron, as well as a power plant in Bolivia, where it acquired development rights for 20 billion tonnes of iron ore in 2007. In Mozambique, the company is engaged in coal and chromite exploration and in Madagascar for limestone.
The company was also in the fray for Australian coal firm, Rocklands Richfield. While some of the raw material would be used for independent projects close to the mines, a part of it could be used to cater to Indian plants’ needs.
Plans are afoot to set up a seven-million-tonne steel plant and a 1,600-Mw power plant in Chhattisgarh, an 11-million-tonne steel plant and a 2,600-Mw power plant in Jharkhand, and a 12.5-million-tonne steel plant and a 2,600-Mw power plant in Orissa. The combined investment in the three states would be around Rs 96,000 crore.
Spiralling raw material costs and delays in mine allocation in India have pushed most of the companies to scout for resources overseas. India has approximately 23.59 billion tonnes of iron ore scattered across states like Jharkhand, Orissa, Chhattisgarh, Karnataka and Goa. Of this, only 6.3 billion tonnes is proven reserves.
Proven reserves of coking coal — which accounts for 50 per cent of raw material costs for steel producers — stand at 4.6 billion tonnes, but the quality of Indian coking coal is not suitable for making steel.
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
|
Content Guide
